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Returns: Mind the Gap

Lower and more volatile growth, together with higher inflation and interest rates, could slow the performance of many equity and bond indices, opening a wider gap between targeted returns and return outlooks—especially real return outlooks. This “exhausted beta” phenomenon, together with the potential for higher price volatility and an upward bias in rates, is likely to make return profiles more reliant on income, illiquidity and niche-market premia, as well as active management (asset allocation, stock selection, corporate engagement and operational “alpha”).
S&P 500 Index, Valuation Multiples and Subsequent 10-Year Returns, 1960 – 2012
 
S&P 500 Index, Valuation Multiples and Subsequent 10-Year Returns, 1960 – 2012 
Source: Robert Shiller, Neuberger Berman. Data as of March 2022. Data excludes the P/E ratios for November 2008 through October 2009, which were extraordinarily high not due to rising valuations but due to the earnings depression that followed the Great Financial Crisis. For illustrative purposes only. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed or any historical results. Indices are unmanaged and not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.

Dividend-Growing Stocks Could Be Attractive in the Coming Environment
 
Dividend-Growing Stocks Could Be Attractive in the Coming Environment 
Source: MSCI. Data as of December 31, 2021. For illustrative purposes only. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed or any historical results. Indices are unmanaged and not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.

Forward-Looking Estimated Returns Suggest That Targets Might Be Difficult to Achieve Without Higher Return-Profile Assets Such as Private Equity
 
Forward-Looking Estimated Returns Suggest That Targets Might Be Difficult to Achieve Without Higher Return-Profile Assets Such as Private Equity 
Source: Neuberger Berman, Bloomberg-Barclays, Cambridge Associates, FactSet; Analytics are as of June 7, 2022. Alternatives basket includes hedged strategies (15%),Commodities (5%), Private debt (10%), Value add real estate (10%), Core real estate (30%), Private Equity (30%). IMPORTANT: The performance estimates are hypothetical in nature and reflect the Neuberger Berman’s Capital Market Assumptions. The estimates do not reflect actual investment results and are not guarantees of future results. Alternative Assets may include investment vehicles that are subject to investor eligibility restrictions and may not be suitability for all investors. Please see Additional Disclosures at the end of the presentation for asset class and index definitions, terminology definitions and Neuberger Berman’s Capital Market Assumptions. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal.

Investment Ideas
Looking beyond “exhausted beta”
Exploiting your natural advantages, overcoming fear of complexity
Value investing
Long/short strategies
Fully flexible approaches to fixed income and credit
Short-duration credit
Prioritizing income across asset classes
Integrating public and private market investments
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